Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1968-69 - Assessee was owner of certain land - On 17-8-1961, Collector of Pune requisitioned said land under Bombay Land Requisition Act, 1948 - Under section 8 of the said Act right to receive amount of compensation accrued to assessee the moment he was deprived of possession and from year to year - By an order dated 7-8-1970 Collector fixed amount of compensation at rate of Rs. 5,995 per annum in lieu of rental - Even prior to fixation of quantum of compensation by said order Collector paid a sum of Rs. 33,322 in part to assessee in March 1968 - Whether amount of compensation for requisition of land of assessee was assessable year to year on accrual basis and not in a lump sum in year of receipt - Held, yes FACTS The assessee was the owner of certain land. On 17-8-1961 the Collector of Pune requisitioned the said land under the Bombay Land Requisition Act, 1948 for rehabilitation of flood victims. Under section 8 of the said Act the right to receive the amount of compensation accrued to the assessee the moment he was deprived of possession and from year to year. Further, the Bombay Land Requisition (Determination of Compensation) Rules, 1949 laid down a scheme for determination of compensation in lieu of rental amount payable to the assessee. By an order dated 7-8-1970 the Collector fixed the amount of compensation at the rate of Rs. 5,995 per annum in lieu of rental. Even prior to fixation of quantum of compensation by the said order dated 7-8-1970 the Collector paid a sum of Rs. 33,322 in part to the assessee in March 1968 and the balance of the amount of compensation was paid by the Collector to the assessee on 25-8-1970. The assessee claimed that the said amount of Rs. 33,322 was liable to be assessed during the years in which it accrued to him, that is, year to year. The ITO disallowed the assessee's claim and included the entire amount of Rs. 33,322 in the income of the assessee on receipt basis for the assessment year 1968-69. On appeal, the AAC held that the said amount could not be so included in the income of the assessee for the assessment year 1968-69 on the ground that…

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